The diagram below shows the marginal cost of abatement of greenhouse-gas emissions (GHGs) for each of two firms, A, and B.
FIGURE 17-7
Refer to Figure 17-7. Suppose the government puts in place a cap-and-trade system which leads to an equilibrium permit price of $7.50 per tonne of emissions. Which of the following statements describes the response of Firm B?
◦ Firm B abates 20 tonnes of emissions and avoids paying for permits at a cost of $7.50 per tonne.
◦ Firm B abates 20 tonnes of emissions and sells permits to Firm A allowing Firm A to emit 10 tonnes of emissions.
◦ Firm B abates 10 tonnes of emissions and buys permits from Firm A.
◦ Firm B abates 10 tonnes of emissions and sells permits to Firm A.
◦ Firm B abates 20 tonnes of emissions and buys permits allowing it to emit 10 tonnes of emissions.
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Anatomy diagram
Echinoderm Diagram with labels
Diagram of a cell
Carbon dioxide: The anthropogenic greenhouse gas of primary concern